Which of the following describes the process where an investor borrows a percentage of the purchase price of stocks from the brokerage firm?

Question

Quizplus · Accepted Answer

Buying on margin involves borrowing money from a brokerage firm to purchase stocks, with the stocks themselves serving as collateral for the loan. This allows investors to potentially increase their returns but also increases their risk as losses can also be magnified. A margin call is a demand for additional funds to be added to a margin account to meet minimum equity requirements, while futures trading involves buying or selling contracts for the future delivery of specific assets. Dealer's account trading is not a recognized term in finance.

Which of the Following Describes the Process Where an Investor